Looking back on my time running my own company there are four things that I did consistently. I didn’t realise the importance. I just did it. Subsequently I’ve seen the same four things mentioned time and time again in different ways. So time to reveal the secret…
- New Customers. I spent a lot of time finding new customers. I travelled the world visitng journalists and analysts telling them about our messaging server and as a result I had over 200 mentions in the press, numerous reviews and were even included in books such as “Essential Tools for Windows NT”.
- Repeat Customers. It takes a lot more effort to find new customers than get additional revenue from current customers so we established two revenue streams from our customers. First was the software upgrade cycle because we had to modify the software for security threats; protocol changes; interoperability as well as adding new features requested by customers. The second stream was a support service for those who needed help running their systems. To give you an idea how far we went; in one case we identified that the customer’s server had a faulty memory chip. Once replaced our software (and all other software on that server) worked correctly again.
- Referred Customers. The quality of our software and support service meant that all our customers were confident to recommend our system to their friends and colleagues. I achieved a referral rate of 2 or 3 – that is each customer told (on average) 2 or 3 other people who became customers. That lead to phenomenal growth in the first few years.
- Profit. Every sale must make a profit to keep the company going. Making a profit means knowing the cost of supply of the product or service. For example, we sold Support contracts that would pay for approximately an hour of engineer’s time. On average each support contact would cost us 2.8 hours to resolve. On the face of it we made a loss (and the customer got excellent value for money). But we knew that only 1 in 8 contracts would result in a support incident. (If only we knew which one of eight not to sell!)
Our profit gave us massive freedom to operate – we could be confident in hiring new staff to support the customers. In fact we could decide whether to take the profit as dividends; bonuses; continue innovation in product and/or process; new products; invest in new, external opportunities; etc. The choice was mine!